Analyst Identifies New Ways to Reduce Risk of ID Theft

Billions of dollars -- that's what identity theft costs U.S. businesses and consumers each year. New research clearly demonstrates that online banking, bill payment and statement viewing is one of the best ways businesses and their customers can protect themselves against identity theft. Yet, consumers still believe incorrectly that online financial transactions increase their risk of fraud. This notion is incorrect.

Based on findings from Federal Trade Commission and United States Postal Service reports, Javelin Strategy & Research found that two popular kinds of identity theft, fraudulent opening of new accounts and unauthorized use of existing accounts, are frequently traced to theft of paper documents in residential mailboxes and other locations, including incoming statements, new account solicitations and outgoing checks. But by changing bill presentment policies by offering electronic bills and the ability to suppress paper, banks and billers can significantly reduce fraud due to ID theft.

Research analysis by James Van Dyke, founder and principal analyst of Javelin Strategy & Research, and author of the new report, discovered that businesses can quickly implement the following four steps to help reduce fraud and break down consumer misperceptions:

  • Educate customers - Customers who view their statements online are more likely to quickly identify potentially fraudulent activities on an existing account and alert businesses to it, allowing restoration and resolution to begin. Consumer education on the benefits of viewing statements and paying bills online can result in savings both from paper suppression and early fraud detection, plus promote stronger customer adoption and retention.
  • Listen to customers' needs and act - The new Javelin data suggests that financial institutions and billers should enable online statements at a customer's request and offer the option to turn off traditional paper mail for sensitive documents.
  • Online consumers are the best detection of online identity theft - The Federal Trade Commission's October 2003 Identity Theft Survey Report found that 52% of all identity fraud was first discovered by the victim, often by reviewing traditional paper statements. However, by the time paper statements arrive to reveal a fraud incident, more time is likely to have passed, which in turn increases the value of potential fraud and makes prosecution more difficult for the financial institution or biller. Online consumers check accounts nearly four times per month, as compared to one time much later in the month for those who rely on paper statements.
  • Proactive account alerts and activity summaries - Use of active e-mail alerts, consolidated summaries of balances and transactional activity can significantly reduce fraud.

You may like these other stories...

The Governmental Accounting Standards Board (GASB) on Monday defined two approaches for measuring assets and liabilities, which officials said will guide the standard-setting organization in establishing accounting and...
The criteria for reporting a discontinued operation on financial statements was revised by the Financial Accounting Standards Board (FASB) on Thursday.According to Accounting Standards Update No. 2014-08, Presentation of...
Tax writers seek Section 179 extensionTwo tax writers – representatives Pat Tiberi (R-OH) and Ron Kind (D-WI) – are seeking to extend long-term a tax break that allows small businesses to immediately deduct the...

Upcoming CPE Webinars

Apr 17
In this exciting presentation Excel expert David H. Ringstrom, CPA shares tricks that you can use with pivot tables every day. Remember, either you work Excel, or it works you!
Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.